BILL PETERS 07:46 AM ET 10/13/2021

Delta Air Lines (DAL) reported better-than-expected third-quarter earnings before the open on Wednesday, as the airline industry shows signs of rebounding from the impact of the coronavirus’ delta variant. But Delta sees rising fuel costs weighing on Q4 results. Delta stock and other airline stocks tilted lower.

The results for Delta come after American Airlines (AAL) offered a slightly more upbeat third-quarter sales forecast, and Southwest (LUV) tried to recover from a wave of flight cancellations.


Delta Earnings

Estimates: Wall Street expected Delta earnings to swing to a 15-cent per-share profit, after six quarters of losses due to the pandemic, according to FactSet. Revenue was seen coming in at $8.376 billion, a 174% jump from a year ago but still down 33% from 2019 levels.

Results: Delta earnings per share came in 30 cents a share. Revenue nearly tripled to $9.15 billion. Business travel lags the recovery in leisure travel.

Delta sees revenue continuing to improve in the fourth quarter, but expects a small loss due to rising fuel costs.


Delta Stock, Airline Stocks

Delta this month said trends in travel demand had regained their footing, after the rise of the delta variant threatened this year’s rebound in travel demand.

But after the airline industry last year idled jets, instituted furloughs and encouraged voluntary staff departures to adjust to plummeting demand, it has had to race to get pilots trained after demand snapped back. Industry observers have raised concerns about potential understaffing. Airline stocks have been uneven this year.

Delta stock dipped 0.3% in the stock market today. Shares have been consolidating after a run-up through spring. The stock has a 43 Composite Rating and an 18 EPS Rating.


Among other airline stocks, United Airlines (UAL) rose 1%.

American Airlines rose 0.25%. The carrier on Tuesday said it expected third-quarter revenue to be down around 25% from the third quarter of 2019. That estimate lands in the upper range of an earlier forecast for revenue falling roughly 24% to 28% from Q3 2019.


Southwest Fallout

Southwest stock was flat early Wednesday. Shares gained 1% on Tuesday, rebounding from the hit it took after the airline over the weekend canceled more than 2,000 flights. The carrier said it expected a “more normal operation” on Tuesday.

Southwest said bad weather in Florida — where it has a lot of flight coverage — and issues with air-traffic control caused the cancellations, leaving jets and flight crews out of place and causing a ripple effect through its flight network. The carrier’s pilots union blamed what it described as poor management.

But both said the cancellations were not due to employee work stoppages.


“I can say with certainty that there are no work slowdowns or sickouts either related to the recent mandatory vaccine mandate or otherwise,” Casey Murray, the pilots union’s president, said in a statement on Sunday.

Southwest this month said that employees needed to be vaccinated against Covid-19 — or be cleared for accommodations — by Dec. 8 to keep working at the company.

On Tuesday, airline stocks analysts cited other reasons for the cancellations.


“At the end of August, Southwest announced it would trim its flight schedule for the fall to better align its employee operations, which made recovering from these disruptions more difficult than usual,” analysts at Morgan Stanley said in a research note.

“This also comes alongside hiring challenges that Southwest (and the entire airline industry) has been facing over the past few months,” they continued.